"Freedom is never more than one generation from extinction." ---Ronald Reagan
"Election days come and go. But the struggle of the people to create a government which represents all of us and not just the one percent - a government based on the principles of economic, social, racial and environmental justice - that struggle continues." ---Bernie Sanders
Left-Right Conflict and Cooperation toward a Sustainable World
Introduction
In December 2016, newspapers headlined “Obama Laments Divided Country,” the Person of the Year cover of Time declared "Donald Trump, President of the Divided States of America," and there’s no end in sight.
This paper addresses the political-economic divide between the political left and political right, and its closure, first as an issue between the world population’s labor 99%, owning only half the world’s wealth or capital, and the capitalist 1%, investors owning the other half, and then between paradigms of other pairs that parallel this labor-capitalist pair.
It will do so by developing the paradigm of left and right’s competing “employment advantage” and “trading advantage, respectively.” You will see the first example of its application when a property owner decides whether to plow his land by employing a local farmer (labor) and his tractor (capital) or obtain them through middlemen to exploit trade-offs between more kinds and quantities of each.
The Labor 99% v. The Capitalist 1%
Labor members and capitalists think of the Left-Right division in terms of the labor 99% wanting higher wages on hours worked and lower prices on products purchased and the capitalist 1% wanting higher return on capital invested by paying lower wages on hours worked and receiving higher prices on products sold, a kind of zero sum game in which each side gains only at the expense of the other.
This, however, wholly dismisses the fact that to produce any products at all by which to have any income at all requires professional, skilled and unskilled hours worked and capital hours (of land, buildings, vehicles, tools, energy and inventories) utilized in doing that work to produce those products. So, the better the cooperation between labor force members using others’ capital and business investors using others’ labor, the better the quantity, quality and distribution of products they produce and the well-being of by and for whom they are produced.
So, the idea is to create a simple model of Left and Right to use as a focal point for addressing grievances and promoting cooperation. It’s based on the following spectrum of capital/labor pairs.
Any individual, group or nation’s pairs of valuations of average capital hours and average labor hours as proportions of their sum, used in production in general or a product in particular, be it oranges, houses or cellphones, is indicated by their position somewhere along this diagram, and these two proportions always add to one.
In the diagram, the rightward, more capital (C) intensive proportions correlate with the greater ownership of the means of production by capitalists, the leftward, labor (L) intensive proportions with the working capacity of skilled and unskilled labor, and the middle, more equal proportions of C and L hours with the more middle class small business owners or professionals, due to their investment of their own capital in their enterprises or educations.
Most tasks use the more middle combinations of average C and L as an optimum, due to the declining increments in production from increases in one and decreases in the other from their most productive proportions nearer the middle of the spectrum.
This works out economically and politically to more production workers, small business owners and professionals that use these middle ratios being voters (minus cross check voters) towards the middle of the spectrum than the heads of capital and labor exercising their “trading advantage” of extreme proportions or quantities nearer the spectrum’s ends.
To understand this trading advantage, note that before using the optimum average proportions of labor and capital to produce a product, you must already have them or obtain them by trading with others, by offering them a share in the increased production of your product through wages or dividends, or a share in your own proportions of labor and capital hours, by which they can produce their own product(s).
Say, for example, a property owner decides to cultivate oats on a 40-acre parcel, and they know, in talking to farmers, that the lowest cost method of doing so is to rent a medium sized tractor and pay the going rate for someone with a couple of years’ experience to operate it. So, they can either find a local farmer with a medium sized tractor and a couple of years’ experience, or rent just a medium sized tractor from someone and hire someone else to use it.
The person with the medium sized tractor has an “employment advantage” because the property owner may hire him because he has a medium sized tractor. However, labor without its own tractor can be used on a tractor of any size without leaving their own tractor idle, and the person who rents out just tractors can do so, without wasting his labor, to anyone who wants to use it them self or hire someone else. So, this is called “trading advantage.” Those who practice this may supply the proportions of tractor size and tractor experience for any possible optimal proportions of tractor size and operator experience, and an employment agency could supply them the labor to run it. ------------------------------------------------------------------------------------------------------------------
Employment advantage occurs when the cost of labor or capital input to production from the given source is less than that from another source, to wit, when the cost of the tractor operator or the tractor from a given source is less than that from another source.
Trading advantage occurs when the cost of labor or capital input to production from another source is less than that from a given source, to wit, when the cost of the tractor operator or the tractor from another source is less than that from the given source.
------------------------------------------------------------------------------------------------------------------ This would be the case with property owners who schedule tractor usage and workers used through a cooperative of their own or a middleman. However, a middleman is a profit maximizer, and will charge, in addition to the costs incurred by a farmer-owned cooperative, the additional value the cooperative members would realize by not relying solely on the employment advantage of hiring someone with their own tractor. This free money, of course, attracts competing middlemen.
Today many market-dominating corporations owned by the 1%, such as Apple, Nike, McDonald’s, Walmart and Amazon, are middlemen: they find third party suppliers for the full range of “tractors” (land, buildings, vehicles, tools, energy, etc. as inputs to production) and separate suppliers of low cost labor, often in third world countries, and then contract for their use by factories in those countries to produce these products and independent dealers to sell the products at monopolistic (sole-supplier) or oligopolistic (few suppliers) prices.
Small business persons and professionals of the middle class, like the independent farmer of the past, rely primarily on employment advantage of time or capital invested in their “tractor”- their business, trade or education - as these are sunk costs, i.e., required for enterprise operation or professional employment. This investment may provide them with work, but, because they likely operate as small business owners, independent contractors or employees of large corporations, competition is often stiff and income and profits low or non-existent.
In the last election, conservative Trump exploited the declining employment advantage of the middle class, disappearing due to automation and outsourcing, and traders" two-source advantage of extreme difference of proportions of Capital and Labor between the lower 99% and the upper1%, by promising low C/L ratio workers of the 99% with employment by high C/L ratio corporations of the 1% to produce a wide mid-range of C/L products, ala Koch Industries. Democrats Clinton and Saunders, on the other hand, sought to address the income and wealth inequality between the lower 99% and the upper 1% by promising the middle class reduced taxes and costs of education.
Trump won because Bernie middle class supporters in the middle of the C/ L spectrum didn’t turn out in sufficient numbers for Clinton. Also, Trump appealed to those who admire his concentration of wealth by trading on his Trump brand monopoly and by appealing to the prejudices of those who have low income C/L ratios and blame it on Hispanic minorities, who have the employment advantage for low C/L ratio work or will simply work for less pay.
Be it oranges, houses or cell phones, the participation of people of a full range of average C/L ratios, and, therefore, trading and employment advantage, are required for trading for inputs to their production, using those inputs in their production and then trading them to consumers. For this reason, it would behoove candidates in the next election to appeal to producers and traders of the widest possible range of C/L ratios.
Labor and small business owners concern themselves mostly with exploiting their employment advantage by using their expertise and experience with the more optimum C/L ratios, usually nearer the middle of the spectrum, to produce products, capitalists mostly with trading this, their product capital, towards the middle of the spectrums for producing other products, seeking to increase their wealth by charging monopolistic or oligopolistic prices in product C/L spectrums where their trading faces weak employment advantage.
As comebacks, labor attempts to exploit their strength in numbers (largely overridden by the National Labor Relations Act , Taft-Hartley Act, and right-to-work [without union representation]laws) at the bargaining table and the polls, and capitalists attempt to exploit their extreme advantage in wealth by paying lobbyists and donating to political campaigns, resulting in the zero-sum game divisions already mentioned.
These divisions can, should and are being explicated, and the mutual benefits of their labor + capital relationship to the enterprise and community explored, to build a consensus of mutual accommodation, at “town halls”between labor and capitalists and also between constituents (including the professionals and small business members of the indivisible movement) and their elected representatives.
Parallels of Labor v. Capitalists
Below is a listing of labor v. capitalist parallels. Like labor v. capitalists they can be viewed as fairly or unfairly competing to provide what the other needs to do its job:
This phrase, used in the press, means that there are trade-offs effecting national well-being between spending on defense of a nation v. feeding a nation; that you can’t have much of one without the other; that the total of both is greater when you spend on both, and therefore have to spend less to have a nation that is both sufficiently secure and sufficiently fed.
Labor generally prefers butter to guns because having sufficient food allows them to exercise their employment advantage and thus compete with those with a trader’s advantage. Capitalists generally prefer guns to butter because they allow them to defend their assets at home and abroad or to eliminate others with competing employment or trading advantages.
In our tractor example, the property owner could be Uncle Sam who must choose between the tax break to give to farmers for investing in tractors to feed the population, and how much to put in the defense budget for tractors to maintain air fields in the Middle East that help protect U.S. oil interests from expropriation by ISIS. ISIS membershave few employment prospects and little employment advantage beyond warfare. ----------------------------------------------------------------------------------------------------------------- Excerpted from the Wikipedia article, Guns Versus Butter Model):
Guns and Butter Production Possibilities Frontier:
The production possibilities frontier for guns versus butter. Points like X are impossible to achieve, while the barely achievable B, C, and D illustrate the tradeoff between guns and butter: at these levels of production, producing more of one requires producing less of the other. A, however, is smack dab in the middle of possible.
US President Lyndon B. Johnson's Great Society programs in the 1960s are examples of the guns versus butter model. While Johnson wanted to continue New Deal programs and expand welfare with his own Great Society programs, he also was in the arms race of the Cold War, and the Vietnam War. These wars put strains on the economy and hampered his Great Society programs. This is in stark contrast to President Dwight D Eisenhower's own objections to the expansion and endless warfare of the military industrial complex. In his Chance for Peace speech in 1953, he referred to this very trade-off, giving specific examples:
“Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children.
The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities. It is two electric power plants, each serving a town of 60,000 population. It is two fine, fully equipped hospitals. It is some fifty miles of concrete pavement. We pay for a single fighter plane with a half million bushels of wheat. We pay for a single destroyer with new homes that could have housed more than 8,000 people…. This is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron. .... Is there no other way the world may live?” -----------------------------------------------------------------------------------------------------------------
Guns and Butter Production Possibilities Frontier + Externalities:
Production Possibility Curve + Externalities
To have the Guns v. Butter model address issues of climate change and sustainability, I have added the double headed arrow to the production possibility frontier (PPF) and the “+ G[uns] Externalities” and the “ + B[utter] Externalities” phrases to the labels for the Guns and Butter axis.
An externality is a consequence of an economic activity experienced by third parties; it can be either positive or negative. Pollution emitted by an oil refinery that spoils the surrounding environment and affects the health of nearby residents is a negative externality. House holders who buy and install fire alarms and fire extinguishers create a positive externality in the likely hood that their neighbors’ homes are also less likely to be destroyed by fire.
When the sum of the externalities is positive, the PPF moves out and has greater Guns and Butter values, if negative, the PPF moves in and they become less. In Uncle Sam’s tractors decision, if he replaced the gas-powered tractors with electric solar-charged versions, the PPF curve would shift out due to lower air pollution and greenhouse gas emissions. But If he was pressured by the oil companies and he decided not to, it would shift back.
According to UN figures, world population has increased by a billion every 12-14 years since 1974, from 3 billion to 7 billion and will do so again in the next 14 years. Economic activity and global warming due to fossil fuels, have increased in one to one proportion to population increase. So has its negative externalities: carbon-based air pollution, ocean plastics contamination and acidification, broken food chains via plant and animal poisoning and extinction, melting glaciers and rising sea levels, disappearance of water aquifers, forests, arable land and mineral resources, droughts, violent hurricanes, famine, disease and displacement of populations: all the makings of a collapsing PPF.
Unfortunately, corporations wanting to profit from trade and workers ready to work are aware of only the increased economic activity, not its cause or consequence. In fact, like wars, natural disasters are good for businesses and their employees not in the same locale, because they, along with population growth provide a need for their products. But overpopulation and its attendant exhaustion of natural resources, dwindling availability of food, clothing and shelter and lack of education and training decrease labor’s employment advantage; on the other hand, labor could save themselves and capitalists by practicing Planned Parenthoodworldwide.
An alternative to Planned Parenthood to reduce carbon emissions by the population for production of guns or butter, is a gradually increasing tax per ton on fossil fuels at their mine, well or port point of entry into the economy and distribution of it back to the [labor and capital] households of that economy, as proposed to Congress by Citizens Climate Lobby. These increases would help account for the negative externality costs of carbon emissions thus making renewable energy sources relatively less expensive than, and used instead of, fossil fuel sources, reducing their carbon emissions.
Such are the topics of interviews on the weekly “Guns and Butter” radio show, 1:00 PM PDT, Wednesdays on KPFA radio.
Conclusion
Through the politically tinged left and right lenses of their employment and trading advantages,
In the first section, “The Labor 99% v. the Capitalist 1%,” we studied their competing proportions of labor and capital resources used in producing products
In the second, “Parallels of Labor v. Capitalists,” their competing styles for fairly or unfairly providing what the other needs to do its job
In the third, “Guns v. Butter,” their competing proportions of products for which labor and capital resources are used, towards profits, wages, population growth, and sustainability of capitalist and labor well-being.
Perhaps this framework will lend a more constructive coherence to what is said by both perspectives at town halls, in their letters to the editor and government representatives, and by those running for office, advocating for the less fortunate or coaching others.
Albert Kueffner Emeryville, CA (510) 290-1394 albertkueffner@sbcglobal.net
This would be the case with property owners who schedule tractor usage and workers used through a cooperative of their own or a middleman. However, a middleman is a profit maximizer, and will charge, in addition to the costs incurred by a farmer-owned cooperative, the additional value the cooperative members would realize by not relying solely on the employment advantage of hiring someone with their own tractor. This free money, of course, attracts competing middlemen.
Today many market-dominating corporations owned by the 1%, such as Apple, Nike, Mc Donald’s, Walmart and Amazon, are middlemen: they find third party suppliers for the full range of “tractors” (land, buildings, vehicles, tools, energy, and inputs to production) and separate suppliers of low cost labor, often in third world countries, and then contract for their use by factories in those countries to produce these products and independent dealers to sell the products at monopolistic (sole-supplier) or oligopolistic (few suppliers) prices.
Small business persons and professionals of the middle class, like the independent farmer of the past, rely primarily on employment advantage of time or capital invested in their “tractor”- their business, trade or education - as these are sunk costs, i.e., required for enterprise operation or professional employment. This investment may provide them with work, but, because they likely operate as small business owners, independent contractors or employees of large corporations, competition is often stiff and income and profits low or non-existent.
In the last election, conservative Trump exploited the declining employment advantage of the disappearing middle class, due to automation and outsourcing, and traders’ two-source advantage of extreme difference of proportions of Capital and Labor between the lower 99% and the upper 1% by promising low C/L ratio workers of the 99% with employment by high C/L ratio corporations of the 1% to produce a wide mid-range of C/L products, ala. Democrats Clinton and Saunders, on the other hand, sought to address the income and wealth inequality between the lower 99% and the upper 1% by promising the middle class reduced taxes and costs of education.
Trump won because Bernie middle class supporters in the middle of the C/ L spectrum didn’t turn out in sufficient numbers for Clinton. Also, Trump appealed to those who admire his concentration of wealth by trading on his Trump brand monopoly and by appealing to the prejudices of those who have low income C/L ratios and blame it on Hispanic minorities, who have the employment advantage for low C/L ratio work or will simply work for less pay.
Be it oranges, houses or cell phones, the participation of people of a full range of average C/L ratios, and, therefore, trading and employment advantage, are required for trading for inputs to their production, using those inputs in their production and then trading them to consumers. For this reason, it would behoove candidates in the next election to appeal to producers and traders of the widest possible range of C/L ratios. Labor and small business owners concern themselves mostly with exploiting their employment advantage by using their expertise and experience with the more optimum C/L ratios, usually nearer the middle of the spectrum, to produce products, capitalists mostly with trading this, their product capital, towards the middle of the spectrums for producing other products, seeking to increase their wealth by charging monopolistic or oligopolistic prices in product C/L spectrums where their trading faces weak employment advantage.
"Freedom is never more than one generation from extinction." ---Ronald Reagan
"Election days come and go. But the struggle of the people to create a government which represents all of us and not just the one percent - a government based on the principles of economic, social, racial and environmental justice - that struggle continues." ---Bernie Sanders
Left-Right Conflict and Cooperation toward a Sustainable World
Introduction
In December 2016, newspapers headlined “Obama Laments Divided Country,” the Person of the Year cover of Time declared "Donald Trump, President of the Divided States of America," and there’s no end in sight.
This paper addresses the political-economic divide between the political left and political right, and its closure, first as an issue between the world population’s labor 99%, owning only half the world’s wealth or capital, and the capitalist 1%, investors owning the other half, and then between paradigms of other pairs that parallel this labor-capitalist pair.
It will do so by developing the paradigm of left and right’s competing “employment advantage” and “trading advantage, respectively.” You will see the first example of its application when a property owner decides whether to plow his land by employing a local farmer (labor) and his tractor (capital) or obtain them through middlemen to exploit trade-offs between more kinds and quantities of each.
The Labor 99% v. The Capitalist 1%
Labor members and capitalists think of the Left-Right division in terms of the labor 99% wanting higher wages on hours worked and lower prices on products purchased and the capitalist 1% wanting higher return on capital invested by paying lower wages on hours worked and receiving higher prices on products sold, a kind of zero sum game in which each side gains only at the expense of the other.
This, however, wholly dismisses the fact that to produce any products at all by which to have any income at all requires professional, skilled and unskilled hours worked and capital hours (of land, buildings, vehicles, tools, energy and inventories) utilized in doing that work to produce those products. So, the better the cooperation between labor force members using others’ capital and business investors using others’ labor, the better the quantity, quality and distribution of products they produce and the well-being of by and for whom they are produced.
So, the idea is to create a simple model of Left and Right to use as a focal point for addressing grievances and promoting cooperation. It’s based on the following spectrum of capital/labor pairs.
In the diagram, the rightward, more capital (C) intensive proportions correlate with the greater ownership of the means of production by capitalists, the leftward, labor (L) intensive proportions with the working capacity of skilled and unskilled labor, and the middle, more equal proportions of C and L hours with the more middle class small business owners or professionals, due to their investment of their own capital in their enterprises or educations.
Most tasks use the more middle combinations of average C and L as an optimum, due to the declining increments in production from increases in one and decreases in the other from their most productive proportions nearer the middle of the spectrum.
This works out economically and politically to more production workers, small business owners and professionals that use these middle ratios being voters (minus cross check voters) towards the middle of the spectrum than the heads of capital and labor exercising their “trading advantage” of extreme proportions or quantities nearer the spectrum’s ends.
To understand this trading advantage, note that before using the optimum average proportions of labor and capital to produce a product, you must already have them or obtain them by trading with others, by offering them a share in the increased production of your product through wages or dividends, or a share in your own proportions of labor and capital hours, by which they can produce their own product(s).
Say, for example, a property owner decides to cultivate oats on a 40-acre parcel, and they know, in talking to farmers, that the lowest cost method of doing so is to rent a medium sized tractor and pay the going rate for someone with a couple of years’ experience to operate it. So, they can either find a local farmer with a medium sized tractor and a couple of years’ experience, or rent just a medium sized tractor from someone and hire someone else to use it.
The person with the medium sized tractor has an “employment advantage” because the property owner may hire him because he has a medium sized tractor. However, labor without its own tractor can be used on a tractor of any size without leaving their own tractor idle, and the person who rents out just tractors can do so, without wasting his labor, to anyone who wants to use it them self or hire someone else. So, this is called “trading advantage.” Those who practice this may supply the proportions of tractor size and tractor experience for any possible optimal proportions of tractor size and operator experience, and an employment agency could supply them the labor to run it.
------------------------------------------------------------------------------------------------------------------
- Employment advantage occurs when the cost of labor or capital input to production from the given source is less than that from another source, to wit, when the cost of the tractor operator or the tractor from a given source is less than that from another source.
- Trading advantage occurs when the cost of labor or capital input to production from another source is less than that from a given source, to wit, when the cost of the tractor operator or the tractor from another source is less than that from the given source.
------------------------------------------------------------------------------------------------------------------This would be the case with property owners who schedule tractor usage and workers used through a cooperative of their own or a middleman. However, a middleman is a profit maximizer, and will charge, in addition to the costs incurred by a farmer-owned cooperative, the additional value the cooperative members would realize by not relying solely on the employment advantage of hiring someone with their own tractor. This free money, of course, attracts competing middlemen.
Today many market-dominating corporations owned by the 1%, such as Apple, Nike, McDonald’s, Walmart and Amazon, are middlemen: they find third party suppliers for the full range of “tractors” (land, buildings, vehicles, tools, energy, etc. as inputs to production) and separate suppliers of low cost labor, often in third world countries, and then contract for their use by factories in those countries to produce these products and independent dealers to sell the products at monopolistic (sole-supplier) or oligopolistic (few suppliers) prices.
Small business persons and professionals of the middle class, like the independent farmer of the past, rely primarily on employment advantage of time or capital invested in their “tractor”- their business, trade or education - as these are sunk costs, i.e., required for enterprise operation or professional employment. This investment may provide them with work, but, because they likely operate as small business owners, independent contractors or employees of large corporations, competition is often stiff and income and profits low or non-existent.
In the last election, conservative Trump exploited the declining employment advantage of the middle class, disappearing due to automation and outsourcing, and traders" two-source advantage of extreme difference of proportions of Capital and Labor between the lower 99% and the upper1%, by promising low C/L ratio workers of the 99% with employment by high C/L ratio corporations of the 1% to produce a wide mid-range of C/L products, ala Koch Industries. Democrats Clinton and Saunders, on the other hand, sought to address the income and wealth inequality between the lower 99% and the upper 1% by promising the middle class reduced taxes and costs of education.
Trump won because Bernie middle class supporters in the middle of the C/ L spectrum didn’t turn out in sufficient numbers for Clinton. Also, Trump appealed to those who admire his concentration of wealth by trading on his Trump brand monopoly and by appealing to the prejudices of those who have low income C/L ratios and blame it on Hispanic minorities, who have the employment advantage for low C/L ratio work or will simply work for less pay.
Be it oranges, houses or cell phones, the participation of people of a full range of average C/L ratios, and, therefore, trading and employment advantage, are required for trading for inputs to their production, using those inputs in their production and then trading them to consumers. For this reason, it would behoove candidates in the next election to appeal to producers and traders of the widest possible range of C/L ratios.
Labor and small business owners concern themselves mostly with exploiting their employment advantage by using their expertise and experience with the more optimum C/L ratios, usually nearer the middle of the spectrum, to produce products, capitalists mostly with trading this, their product capital, towards the middle of the spectrums for producing other products, seeking to increase their wealth by charging monopolistic or oligopolistic prices in product C/L spectrums where their trading faces weak employment advantage.
As comebacks, labor attempts to exploit their strength in numbers (largely overridden by the National Labor Relations Act , Taft-Hartley Act, and right-to-work [without union representation]laws) at the bargaining table and the polls, and capitalists attempt to exploit their extreme advantage in wealth by paying lobbyists and donating to political campaigns, resulting in the zero-sum game divisions already mentioned.
These divisions can, should and are being explicated, and the mutual benefits of their labor + capital relationship to the enterprise and community explored, to build a consensus of mutual accommodation, at “town halls”between labor and capitalists and also between constituents (including the professionals and small business members of the indivisible movement) and their elected representatives.
Parallels of Labor v. Capitalists
Below is a listing of labor v. capitalist parallels. Like labor v. capitalists they can be viewed as fairly or unfairly competing to provide what the other needs to do its job:
(The last four pairs are from p. 105 of The Green Collar Economy by Van Jones.)
“Guns v. Butter”
This phrase, used in the press, means that there are trade-offs effecting national well-being between spending on defense of a nation v. feeding a nation; that you can’t have much of one without the other; that the total of both is greater when you spend on both, and therefore have to spend less to have a nation that is both sufficiently secure and sufficiently fed.
Labor generally prefers butter to guns because having sufficient food allows them to exercise their employment advantage and thus compete with those with a trader’s advantage. Capitalists generally prefer guns to butter because they allow them to defend their assets at home and abroad or to eliminate others with competing employment or trading advantages.
In our tractor example, the property owner could be Uncle Sam who must choose between the tax break to give to farmers for investing in tractors to feed the population, and how much to put in the defense budget for tractors to maintain air fields in the Middle East that help protect U.S. oil interests from expropriation by ISIS. ISIS membershave few employment prospects and little employment advantage beyond warfare.
-----------------------------------------------------------------------------------------------------------------
Excerpted from the Wikipedia article, Guns Versus Butter Model):
Guns and Butter Production Possibilities Frontier:
The production possibilities frontier for guns versus butter. Points like X are impossible to achieve, while the barely achievable B, C, and D illustrate the tradeoff between guns and butter: at these levels of production, producing more of one requires producing less of the other. A, however, is smack dab in the middle of possible.
US President Lyndon B. Johnson's Great Society programs in the 1960s are examples of the guns versus butter model. While Johnson wanted to continue New Deal programs and expand welfare with his own Great Society programs, he also was in the arms race of the Cold War, and the Vietnam War. These wars put strains on the economy and hampered his Great Society programs.
This is in stark contrast to President Dwight D Eisenhower's own objections to the expansion and endless warfare of the military industrial complex. In his Chance for Peace speech in 1953, he referred to this very trade-off, giving specific examples:
“Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children.
The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities. It is two electric power plants, each serving a town of 60,000 population. It is two fine, fully equipped hospitals. It is some fifty miles of concrete pavement. We pay for a single fighter plane with a half million bushels of wheat. We pay for a single destroyer with new homes that could have housed more than 8,000 people…. This is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron. .... Is there no other way the world may live?”
-----------------------------------------------------------------------------------------------------------------
Guns and Butter Production Possibilities Frontier + Externalities:
To have the Guns v. Butter model address issues of climate change and sustainability, I have added the double headed arrow to the production possibility frontier (PPF) and the “+ G[uns] Externalities” and the “ + B[utter] Externalities” phrases to the labels for the Guns and Butter axis.
An externality is a consequence of an economic activity experienced by third parties; it can be either positive or negative. Pollution emitted by an oil refinery that spoils the surrounding environment and affects the health of nearby residents is a negative externality. House holders who buy and install fire alarms and fire extinguishers create a positive externality in the likely hood that their neighbors’ homes are also less likely to be destroyed by fire.
When the sum of the externalities is positive, the PPF moves out and has greater Guns and Butter values, if negative, the PPF moves in and they become less. In Uncle Sam’s tractors decision, if he replaced the gas-powered tractors with electric solar-charged versions, the PPF curve would shift out due to lower air pollution and greenhouse gas emissions. But If he was pressured by the oil companies and he decided not to, it would shift back.
According to UN figures, world population has increased by a billion every 12-14 years since 1974, from 3 billion to 7 billion and will do so again in the next 14 years. Economic activity and global warming due to fossil fuels, have increased in one to one proportion to population increase. So has its negative externalities: carbon-based air pollution, ocean plastics contamination and acidification, broken food chains via plant and animal poisoning and extinction, melting glaciers and rising sea levels, disappearance of water aquifers, forests, arable land and mineral resources, droughts, violent hurricanes, famine, disease and displacement of populations: all the makings of a collapsing PPF.
Unfortunately, corporations wanting to profit from trade and workers ready to work are aware of only the increased economic activity, not its cause or consequence. In fact, like wars, natural disasters are good for businesses and their employees not in the same locale, because they, along with population growth provide a need for their products. But overpopulation and its attendant exhaustion of natural resources, dwindling availability of food, clothing and shelter and lack of education and training decrease labor’s employment advantage; on the other hand, labor could save themselves and capitalists by practicing Planned Parenthood worldwide.
An alternative to Planned Parenthood to reduce carbon emissions by the population for production of guns or butter, is a gradually increasing tax per ton on fossil fuels at their mine, well or port point of entry into the economy and distribution of it back to the [labor and capital] households of that economy, as proposed to Congress by Citizens Climate Lobby. These increases would help account for the negative externality costs of carbon emissions thus making renewable energy sources relatively less expensive than, and used instead of, fossil fuel sources, reducing their carbon emissions.
Such are the topics of interviews on the weekly “Guns and Butter” radio show, 1:00 PM PDT, Wednesdays on KPFA radio.
Conclusion
Through the politically tinged left and right lenses of their employment and trading advantages,
Perhaps this framework will lend a more constructive coherence to what is said by both perspectives at town halls, in their letters to the editor and government representatives, and by those running for office, advocating for the less fortunate or coaching others.
Albert Kueffner
Emeryville, CA (510) 290-1394
albertkueffner@sbcglobal.net
This would be the case with property owners who schedule tractor usage and workers used through a cooperative of their own or a middleman. However, a middleman is a profit maximizer, and will charge, in addition to the costs incurred by a farmer-owned cooperative, the additional value the cooperative members would realize by not relying solely on the employment advantage of hiring someone with their own tractor. This free money, of course, attracts competing middlemen.
Today many market-dominating corporations owned by the 1%, such as Apple, Nike, Mc Donald’s, Walmart and Amazon, are middlemen: they find third party suppliers for the full range of “tractors” (land, buildings, vehicles, tools, energy, and inputs to production) and separate suppliers of low cost labor, often in third world countries, and then contract for their use by factories in those countries to produce these products and independent dealers to sell the products at monopolistic (sole-supplier) or oligopolistic (few suppliers) prices.
Small business persons and professionals of the middle class, like the independent farmer of the past, rely primarily on employment advantage of time or capital invested in their “tractor”- their business, trade or education - as these are sunk costs, i.e., required for enterprise operation or professional employment. This investment may provide them with work, but, because they likely operate as small business owners, independent contractors or employees of large corporations, competition is often stiff and income and profits low or non-existent.
In the last election, conservative Trump exploited the declining employment advantage of the disappearing middle class, due to automation and outsourcing, and traders’ two-source advantage of extreme difference of proportions of Capital and Labor between the lower 99% and the upper 1% by promising low C/L ratio workers of the 99% with employment by high C/L ratio corporations of the 1% to produce a wide mid-range of C/L products, ala. Democrats Clinton and Saunders, on the other hand, sought to address the income and wealth inequality between the lower 99% and the upper 1% by promising the middle class reduced taxes and costs of education.
Trump won because Bernie middle class supporters in the middle of the C/ L spectrum didn’t turn out in sufficient numbers for Clinton. Also, Trump appealed to those who admire his concentration of wealth by trading on his Trump brand monopoly and by appealing to the prejudices of those who have low income C/L ratios and blame it on Hispanic minorities, who have the employment advantage for low C/L ratio work or will simply work for less pay.
Be it oranges, houses or cell phones, the participation of people of a full range of average C/L ratios, and, therefore, trading and employment advantage, are required for trading for inputs to their production, using those inputs in their production and then trading them to consumers. For this reason, it would behoove candidates in the next election to appeal to producers and traders of the widest possible range of C/L ratios.
Labor and small business owners concern themselves mostly with exploiting their employment advantage by using their expertise and experience with the more optimum C/L ratios, usually nearer the middle of the spectrum, to produce products, capitalists mostly with trading this, their product capital, towards the middle of the spectrums for producing other products, seeking to increase their wealth by charging monopolistic or oligopolistic prices in product C/L spectrums where their trading faces weak employment advantage.